One-Hit Wonders

By Katherine Boccaccio, Deena Amato-mccoy, Marianne Wilson

From the 76,000-sq.-ft. Wall Drug, in Wall, S.D., with its souvenirs, arcades and picture-taking opportunities, to San Francisco’s legendary Gumps, where a Ch’ing Dynasty gilded wood Buddha sits serenely on the first floor, the American landscape is home to a number of single-store success stories, stores whose reputation and prominence extend far beyond their local marketplace.

In this special section, Chain Store Age takes a look at several such retailers. Some names may be familiar, others less so. All are unique in that in an era of cutthroat competition, they are not only holding their own against deep-pocketed, much larger players, but are thriving.

Borsheim’s

Omaha billionaire and renowned investor Warren Buffet makes no secret of why his wildly successful Borsheim’s has remained a one-store jewel. “Because of our single location and the huge volume we generate, our operating expense ratio is usually around 20% of sales,” wrote the chairman of Berkshire Hathaway, which owns Borsheim’s Jewelry, in a letter to customers. “We can, and do, price our goods far below the prices charged by other jewelers.”

But while Borsheim’s is known for its exceptional values, it does not cater to a discount customer. Instead, it throws a wide net that attracts a range of budgets and tastes. The strategy has paid off: The 138-year-old company, which Buffet acquired in 1989, is billed as the jeweler second to Tiffany’s New York City flagship in annual sales. Experts credit the company’s success to the tremendous buying power, prestigious reputation, outstanding customer service and extensive selection—its inventory includes more than 100,000 pieces—that it has built up over the years.

Borsheim’s

Omaha, Neb. Annual sales: $34.2 million

While Borsheim’s is primarily known as an upscale merchant of opulent baubles (its fine-jewelry offerings are legendary), it also stocks many affordable trinkets, as well as corporate gifts and a bridal registry. Service is exemplary across the board—whatever the transaction amount.

Located in a high-end shopping center—Regency Court—in Omaha, the landmark store occupies about 62,000 sq. ft. of retail space and has another 25,000 sq. ft. for offices. Susan Jacques, who rose through the ranks to the top position, runs the company. Originally from Zimbabwe, Jacques studied at the Gemological Institute of America and joined Borsheim’s in the 1980s. She was named president and CEO in 1994, under Buffet’s watch.

Borsheim’s has a global reach. In addition to catalog and e-commerce sales, it offers a unique program that allows customers around the world to contact Borsheim’s and describe what kind of piece they are looking for. Company associates assemble the selections and send them out—for purchase or return. According to Borsheim’s, it sends out several thousand packages annually, ranging in value from $100 to $500,000.

“We have customers in all 50 states and on six continents,” said Trisha Meuret, public relations specialist for the retailer.

When Buffett purchased the majority stake in Borsheim’s, employees wondered what impact he would have on day-to-day business. The answer turned out to be very little. Knowing a good thing when he saw it, Buffett’s directive to management at the time reportedly was: “Don’t change a thing.”

Koontz Hardware

The old saying that you can’t judge a book by its cover definitely applies to Koontz Hardware. The modest exterior of the West Hollywood, Calif., store doesn’t even hint at the treasure chest of merchandise inside. Every last inch of shelf space is packed with gadgets and gizmos, with items stacked floor to ceiling. With a staggering inventory (it claims more than 120,000 items) that ranges from obscure plumbing parts to high-quality cutlery to power tools, Koontz is hardware heaven.

The business was founded by Art Koontz in 1938. From the start, it attracted a loyal following among Hollywood and non-Hollywood types alike. Hollywood businessman Russ Wilson bought Koontz Hardware in 1977 and kept the name because of the store’s fame.

“I would never have changed the name,” Wilson has said. “Koontz was a very popular place before I ever bought it.”

Wilson and his brother Dean already owned one local hardware store—the near century-old Larchmont Hardware—when he bought Koontz. The brothers used their retail experience to build upon Koontz’s already-enviable reputation for great service and wide selection.

Koontz Hardware

West Hollywood, Calif. Annual sales: $7.9 million

The 6,800-sq.-ft. Koontz boasts that its inventory is three times that of a standard Home Depot. The store plays to film people in search of specialty items as well as to regular Joes seeking out the usual nuts and bolts. Its service is as legendary as its inventory. Friendly staffers roam the aisles, with specialists in every department who know the merchandise inside and out and can offer advice on even the most arcane projects. For most shoppers the selection and service-oriented philosophy outweigh the cramped space and non-discount prices.

The store is even celebrated online, with one common theme: Shopping at Koontz is well worth the price.

“How do you pack the best of a Home Depot, Pottery Barn and Target into a space the size of your average fluff and fold?” someone penned on a West Hollywood review site. “This may be the tightest fitting anything in West Hollywood. And I like it.”

In fact, plenty of people like Koontz Hardware. But that doesn’t mean any expansion is in the offing.

“It’s not easy to expand here [in Hollywood],” said Dean Wilson, general manager. “I feel pretty sure that we’ll remain at one store.”

Furnitureland South

If size alone is the barometer of single-store success, Furnitureland South is a smash hit.

Located on a “campus” in the furniture capital of the world—the High Point area of North Carolina—the home-furnishings megastore bills itself as “the world’s largest home-furnishings showplace,” with more than 1 million sq. ft. of selling space.

Despite the success it has experienced since it first opened its doors in 1969, Furnitureland South has kept its presence to the one store in Jamestown, N.C. That has been by design.

“Furnitureland South is positioned in the epicenter of the furniture world,” explained executive VP Jason Harris (Jason’s father Darrell is the founder, and the current president and CEO). “We have been able to capitalize on the incredible advantages that High Point offers with all of the furniture manufacturing and the megafurniture market that occurs twice a year. Our commitment to creating the finest home-furnishings shopping experience in the world has kept our focus to one megastore of over 1 million sq. ft. This store couldn’t be duplicated anywhere else in the world.”

Furnitureland South

Jamestown, N.C. Annual sales: $180 million

Furnitureland South’s offerings include two Design Centers, a catalog showcase gallery, the 200,000-sq.-ft. Clearance Center, the Showroom (home to the indoor furniture collections) and the Mart (outdoor furniture). A 400-ft. glass-encased walkway, called the Skylink, connects the Mart and Showroom. The enormous complex also offers many customer amenities, including Bear Rock Cafe, free shuttle service to area hotels and the airport, local hotel discounts and information on nearby nanny services. Given its size, attractions and extensive offerings, it’s no wonder the retailer is known as the “Disneyland of furniture stores.”

The hallmark of Furnitureland South is an 85-ft.-tall highboy at the entrance to the Mart. It serves as an oversized calling card and beckons to travelers who pass by busy Business 85—and who shop the megaretailer in droves. The company estimates that 70% of its $180 million business comes from outside North Carolina.

Applejack Wine & Spirits

Service. Selection. Price. By turning this cliché slogan into a successful business model, Applejack Wine & Spirits, Wheat Ridge, Colo., has turned one store into a well-known shopping destination.

Herb Becker introduced Applejack Liquors to local shoppers in 1961. When he was ready to retire, he wanted one man to care for his baby: Al Freis.

“Al Fries was a wholesaler who had history with Applejack,” said Jim Shpall, Applejack’s president, and Freis’ son-in-law. “The two met, and made the deal on the back of a napkin.”

Freis took over in 1980. He moved Applejack into a larger store, an estimated 65,000 sq. ft. including warehouse space, and eliminated the stacks of cases that often clutter mom-and-pop liquor stores. After creating a bright, clean selling space, Freis began augmenting his inventory.

Freis differentiated Applejack from competitors by creating an elaborate selection that included vintage and imported wines, cognacs and armagnacs, single-malt and specialty scotches, vintage ports, beers and microbrews.

“We carry 15,000 SKUs, and more than 10,000 of these are wine,” he said.

These efforts have helped Applejack grow into what Shpall calls “the most comprehensive retailer of wines and specialty liquors on the continent.”

Applejack Wine & Spirits

Wheat Ridge, Colo. Annual sales: Not available

Applejack strives to market its offerings at competitive prices. But price alone doesn’t explain its success.

“We wanted to create a location that is worth driving five, 10, even 50 miles to visit,” Shpall explained. “We’ve built our reputation on delivering service and selection, as well as price.”

Applejack’s young, savvy buyers also factor into its success. “They love wine, the game of retailing and have a finger on the pulse of what’s hot,” Shpall said.

For example, early on, this group bought “thousands of cases of 2005 Bordeauxes—one of the best vintages ever,” he explained. “If we waited for Wine Spectator to predict the trend two years later, it wouldn’t have been available.”

And if a shopper can’t find their ideal spirit on the sales floor, Applejack’s staff will special order a bottle or case, and ship it directly to the shopper’s home.

“With an image based on service and selection, it’s important for us to use personal service and our unique inventory to build customer relationships,” Shpall said. “If we don’t deliver this service, we know we could be gone in a heartbeat.”

To keep up Applejack’s momentum, Shpall continuously hunts for new ways to market the store.

“I always read articles and scan the Web to find new ideas,” he said. “And since we are small, we can quickly try new things.”

“The best ideas are the ones I can steal and improve upon,” Shpall added. “If they stick, great. If not, we move onto the next one to keep the momentum going.”

Green Hills

A lot of companies talk about customer loyalty, but Green Hills, a 23,000-sq.-ft., high-volume supermarket in Syracuse, N.Y., walks the walk. The company’s customer-loyalty program is among the most admired in the industry, and has helped the independently owned grocer compete against much larger competitors. The program gets to the heart of the company’s success: Green Hills knows—really knows—its best customers.

Carrie Hawkins founded Green Hills in 1934, as a family farm stand. Over the years, it evolved into a full-service, modern supermarket whose customer service helped drive strong customer loyalty. Industry experts credit current CEO Gary Hawkins for taking the business to the next level by applying technology-based tools to help grow Green Hills’ customer loyalty into true one-to-one marketing.

Green Hills

Syracuse, N.Y. Annual sales: $18 million

Green Hills’ loyalty-card program—one of the first supermarket loyalty programs in the country—is designed to reward its best customers to ensure their continued patronage and reap higher gross margins for the store. When a customer joins the program, she gets more than a card to add to her key chain. Instead, she receives $15 back for spending $100, and a designated “new customer manager” takes her on a personal tour of the store. There are plenty more extras for Green Hills’ top customers, from a $25-off coupon in the garden shop in the spring, to several 5% discount coupons off their total purchases throughout the year.

The company offers personalized service and promotions based on the purchasing data it collects via its frequent-shopper program. Store and department managers also analyze this data weekly.

“We are able to see how many consumers are shopping each department, see the penetration of our top shoppers, and even stay abreast of shopper defections,” Hawkins explained. “This information also helps us to create relevant, personalized promotions and rewards.”

The fact that Green Hills is smaller than its competitors helps it quickly create innovative programs for specific shoppers, and ultimately, stand out in a very saturated marketplace, according to Hawkins. At the same time, the grocer has learned a thing or two from competitors.

“Larger companies taught us how important it is to focus on internal processes and educate our staff about our culture and the processes that help us grow the business,” Hawkins said.

By using its corporate culture, employees and customer data to create a personalized shopping experience, Green Hills is primed to stay in the game.

“This strategy drives loyalty, frequency of visits and lifetime value,” Hawkins added. “It has helped us persevere and become the last independent retailer of significant size in our marketplace.”

Homewood Nursery & Garden Center

From a backyard greenhouse to a garden nirvana, horticultural enthusiast Joe Stoffregen used his green thumb to create a retail destination. He built his first greenhouse (a 20-ft.-by-100-ft. structure) in 1967, for his own enjoyment. But his efforts paid off big time and, with too many plants to care for, he started selling the fruits of his labor to friends and neighbors. By the mid-1980s, Stoffregen used his simple retailing strategy to transition his hobby into Homewood Nursery & Garden Center, which has evolved into one of North Carolina’s premier outdoor stores.

Homewood Nursery sits on a 30-acre park-like setting, complete with winding paths, bridges and beautiful display gardens. More than 4 acres are devoted to greenhouses, a garden center, and an outdoor nursery department, which feature a broad assortment of hanging baskets, plants, flowers, trees and shrubs. University horticulture classes regularly tour the site.

Homewood competes head on with such well-known big-box competitors as Lowe’s and The Home Depot. But it more than holds its own with these retail giants by relying largely on a valuable weapon: its staff.

“The only way to win against competitors is to pinpoint what makes you different, and what areas [competitors] can’t touch you on,” Stoffregen said.

“Sure, we may highlight our large, lovely site, or our great assortment,” he added. “And all that plays a pivotal role. But we stand out because of our people.”

The average tenure of a full-time Homewood associate is almost 10 years. Part-timers on average stay eight years.

“We have a tedious interviewing process because we want to make sure we hire ‘nice people,’” Stoffregen explained. “Our store-level associates are on the front lines with our shoppers. Our associates are the ones who deliver value to the consumer.”

The staff also is pivotal in ensuring that Homewood’s assortment hits the mark during each shopper’s visit. While the company stays abreast of what its best shoppers are purchasing, it is more concerned with shoppers who leave empty-handed.

“If I see a shopper leaving empty-handed, I approach the sales associate who worked with them and ask what that shopper couldn’t find,” Stoffregen said. “Consumers have plenty of other places to spend their money. By listening to their needs, we can learn how to grow sales and earn their loyalty.”

Sometimes just providing the right service can do the trick. As North Carolina enters the 10th month of its drought, residents are banned from watering lawns and plants. Since Homewood operates wells, it has water available. The retailer urges residents to visit the nursery and take home up to five gallons of water for free.

“The idea of a local garden center helping the community is really what retailing is all about,” Stoffregen said.

“You also need to adapt,” he added. “If you can’t adapt to your surroundings, you won’t survive for one day. Since we make our decisions in-house, and don’t have to go through a corporate office, we can stay flexible and successfully compete against larger players.”

West Point Market

West Point Market has won just about every award a specialty food store could win, and has been featured in the food industry’s top publications, from Food and Wine to Bon Appetit. But what really matters the most to the Akron, Ohio, supermarket is the grade that it receives from its customers on a daily basis.

“Our main goal is to make sure that every guest leaves completely satisfied,” said Rick Vernon, CEO, West Point Market.

West Point traces its roots back to 1936, when the three founding partners purchased a small neighborhood grocery in Akron. The store moved to its present location and was renamed West Point Market in 1941. But its transformation to a specialty food giant started in the 1960s with the prodding of Russ Vernon (the son of one of the founding partners), who went on to become CEO and owner. Vernon introduced fine wines, imported cheeses and gourmet foods into the mix at a time when only select retailers in major cities carried such items.

West Point Market

Akron, Ohio Annual sales: $11 million (estimated)

Under Vernon’s leadership, West Point developed a reputation as one of the leading upscale specialty food stores in the nation, renowned for its signature prepared foods, fresh-baked goods, and extensive collection of gourmet-food items. The 26,000-sq.-ft., handsomely outfitted store pampers customers with a host of extras, including wine tastings, consultations with chefs, and sit-down cafes, including an authentic British Tearoom. An array of specialty departments—fine china, gift baskets, gift-wrapping and flowers to name a few—add to the appeal.

In recent years, many retailers have attempted to copy West Point’s gourmet format, to varying degrees of success. But few have been able to duplicate its main point of differentiation: its quality customer service.

“I think the key is to hire the right people, which is not easy to do,” said Vernon, who became chief executive in 2006, upon the retirement of his father.

West Point believes in being flexible in its dealings with employees when it comes to schedules and the like, according to Vernon. As a result, it enjoys a low turnover rate, among full-timers and part-timers alike.

“We pay well, but we also treat our employees well and respect them,” he said. “Our company culture is geared this way, and we try to accommodate everyone to our best efforts. In turn, our associates respect us and treat our customers the same.”

West Point’s customers are very demanding and expect a lot, Vernon said, but the store delivers—at least most of the time.

“We might make mistakes,” he added. “But we’re really good at fixing problems.”

But Vernon noted another reason the chain has kept to one location, a reason that speaks to the success of all “one-hit wonder” retailers.

“It would be very difficult to duplicate what we do beyond one site,” he said. “We don’t have a lot of competition because what we do—the way we do things—is almost impossible for anyone else to duplicate and make sense of. Part of the reason we can do what we do is because we only have the one store.”